Bulletin: ID000001

Dear Associates:

I continue to note problems with the treatment of Townsite Patents and mineral exceptions by issuing agents. It is also significant to note that in mineral areas how Townsite Patents are treated with respect to patented lode mining claims.

A Townsite Patent is one granted by the United States government, originally to either the Mayor of the City or the probate judge, and more recently to individual lot owners. You can find such patents being issued on lands lying in mountainous areas or in valleys. Townsite Patents have issued for Salt Lake City, Provo City, Ogden City, Utah, to the Mayor or Probate Judge and, in Ketchum, Idaho, to the individual land owners. You will find them extensively in mountainous areas of Colorado, such as Central City.

In the Act of Congress that authorizes the issuance of such patents, there are provisions to the effect that the patent does not convey title to mineral lands. Until recently, most Townsite Patents did not make reference to the exception of minerals lands. It is not uncommon to find in areas with extensive mineral activity that, either before or after the Townsite Patent, lode claims were filed. Even though a Townsite Patent may describe a specific area, if a pre-existing mining claim had been staked and filed, it may ultimately prove to be the better title to the surface estate. It becomes significant to such a search and examination to review the Date of Entry of the Townsite Patent Application and the date of entry of any mining claims. If a conflict is found that remains unresolved by conveyances between the holders of the respective chains of title, the matter should be submitted to the Company for consideration prior to the issuance of any title insurance commitment.

The insuring of a lot contained within a townsite becomes very complicated when underlying patented or unpatented lode claims exist. The patent on the lode claim may take exception to the portion of the surface of the land contained within the townsite. OR the patent on the lode claim may not take exception to the portion of the surface contained within the lode claim as previously discussed. The failure of the Patent to resolve the conflict should not be relied upon to establish a belief that the surface estate is held under the Townsite Patent, exclusive of a claim to use of the surface by the holder of the Patented Lode Claim.

In any event, even if the patented lode claim takes exception to the portion of the surface contained in the Townsite Patents, by use and occupation, the patented lode claimant may be in actual possession. This makes giving extended coverage, i.e., removal of rights of parties in possession, etc., very tenuous. It has not been uncommon to find that tacit agreements were reached between holders of the two estates and both use portions of the described tract.

In many instances the owner of the mineral estate and surface estate came into agreement as to the ownership and control of the land, but in more cases they did not. The result is then two completely separate chains of title, one on the patented lode claim and one on the lots in the townsite. You cannot ignore this apparent conflict.

You are reminded of the Company policy that exceptions or reservations for minerals are to be taken in Schedule A of the commitment and policy. If you are uncertain as to whether mineral lands exist, or know of the existence of a townsite, you should alter the Estate/Interest section of your commitment as follows:

"Fee simple in and to the surface estate as granted by a Townsite Patent ... excluding therefrom any mineral lands found therein"

You would continue to take exception in Schedule B of the reservations and exceptions in the Patent and Acts authorizing the issuance thereof.

You should investigate the practices in your office and insure that each person dealing with these interests understand the extent of each ownership interest and the problems posed by their existence.